Low Oil Prices, High Oilsands Emissions Should Influence Keystone XL Decision: EPA

A letter submitted by the U.S. Environmental Protection Agency (EPA) to the State Department gives new weight to concerns the proposed $8 billion Keystone XL pipeline, destined to carry crude from the Alberta oilsands to export facilities along the Gulf of Mexico, will have significant climate impacts.

The EPA letter suggests existing analyses – which downplay the importance of greenhouse gas emissions associated with the project – are out of date and require revision in light of low global oil prices.

Due to the plummeting of oil prices and related market changes “it is important to revisit [the] conclusions” of previous reports, EPA told the State Department.

“Given recent large declines in oil prices and the uncertainty of oil price projections, the additional low prices scenario in the (State report) should be given additional weight during decision making, due to the potential implications of lower oil prices on project impacts, especially greenhouse gas emissions.”

The State Department is due to release a revised analysis of the Keystone XL project and is currently gathering comments from the EPA and other agencies.

A recent report in the journal Nature singled out the oilsands as one of the world’s carbon deposits that must remain in the ground if global temperatures are to remain within the 2 degrees Celsius warming limit recommended by policy makers and scientists.
 

Construction of the Keystone XL pipeline is dependent on a steady flow of oil from the estimated 160 billion barrels in the oilsands. Yet the drop in prices has recently led to abandoned projects and major cuts to the workforce. Suncor, the oilsands’ largest operator, recently announced it will eliminate 1,000 jobs, Shell Canada will cuts its workforce by 10 per cent and Cenovus Energy confirmed its investment in the area will drop by 25 per cent.

A Republican-led Congress is attempting to force approval of the Keystone XL pipeline with new legislation, although President Barack Obama has been clear about his plan to veto any bills that would allow construction to begin.

In 2013, Obama indicated his final decision on the pipeline will come down to the project’s climate impact, saying “our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.”

In its letter to the State Department this week, the EPA said carbon emissions from the pipeline — which has the capacity to carry 830,000 barrels of oil per day — would add up to the equivalent of 5.7 million new passenger vehicles on the road.

“Over the 50-year lifetime of the pipeline, this could translate into releasing as much as 1.37 billion more tons of greenhouse gases into the atmosphere,” the letter states.

Alberta premier Jim Prentice travelled to Washington, D.C. this week to lobby Congress and the Obama administration to approve the pipeline.

Prentice recently told NPR that Alberta “has the most exacting standards around in terms of carbon emissions, the regulatory framework that surrounds industrial emissions.”

When it comes to the venting and flaring of gasses with high warming potentials like methane, Prentice said, “in all these areas, I think we’re world class.”

Yet the EPA seems to have come to its own conclusion regarding Alberta’s greenhouse gas regulations, stating, “until ongoing efforts to reduce greenhouse gas emissions associated with the production of oil sands are more successful and widespread…development of oil sands crude represents a significant increase in greenhouse gas emissions.”

Canada currently has no regulation to limit emissions from the oil and gas industry, and recently Prime Minister Stephen Harper said it would be “crazy” to introduce such rules.

The EPA letter notes “oil sands crude has significantly higher lifecycle greenhouse gas emissions than other crudes” and that the use of oilsands crude creates emissions 17 per cent greater than the use of crude refined in the U.S. on a well-to-wheels basis.

Premier Prentice argued Canada will continue to move crude to the U.S. with or without the Keystone XL pipeline, suggesting rail will pick up the slack. In its letter the EPA appears to agree with this point, suggesting oilsands producers would likely stomach the high cost of rail transport.

But the letter goes on to point to the additional risks associated with transporting large quantities of bitumen, which “can have different impacts than spills of conventional oil.” A recent government-commissioned study in Canada acknowledges there are large gaps in existing knowledge when it comes to the effects of bitumen spills.

Concerns over the pipeline route, especially in Nebraska, requires greater spill preparedness and a clear commitment from TransCanada that the company will assume responsibility for any spills and remediation should a release occur. Spills remain “a concern for citizens and businesses relying on groundwater resources crossed by the route,” the EPA letter notes.

Bill McKibben, founder of 350.org, called the letter a “damning report” and said with it, “the president’s got every nail he needs to finally close the coffin on this boondoggle.”

Image Credit: Kris Krug